>> this is "daybreak: asia." we are counting down to asia's major market opens. there is one game, the u.s. inflation print. is this the one that powell will want to see to turn firmly dovish? you still have expectations that are building around the boj. >> one big central bank kind of game. the boj is part of it. the yen --it all comes down to wage growth. we want a number of at least 3.8% for that not to derail expectations particularly at the open. >> it has been the shifting

perceptions around what the boj will do in its today meeting which concludes next week. we are seeing firming continuing in the japanese currency. yesterday we saw the country avoid a technical recession. better than what economists had been expecting. perhaps we could see a shift in march. it seems for a economists, by april. it depends on what comes out of the wage negotiations. that is something that could force the boj to end its negative interest-rate policy this month if the numbers come in pretty strong. that is what local media is saying here. negotiations wrap up wednesday and the first estimate on friday ahead of the wrapup of the meeting the following tuesday. that is the japan outlook.

we had a drop in yesterday's session. korea coming online looking better so far. range bound. doing better than wall street. u.s. stocks we saw inching lower. it is the countdown to the u.s. inflation print still expected to be in the 3% territory. core reading, three point 7% according to our survey. -- 3.7% according to our survey. >> in australia we have heard about australian households struggling with headwinds. that is the message delivered by the bank. this is the week before the are b.i. meats highlighting how difficult the rate hikes have been with inflation being the single biggest drag after the 13 hikes we have seen since may 2022. rotter markets -- modest --

broader markets. modest gains. we saw the biggest decline in the year for australian equities. down 1.8% at the close yesterday. a modest rebound. some declines for mining stocks including bhp rio tinto. perhaps not as much is expected. materials down .1%. after iron ore -- both on china demand but also swelling inventory. the aussie dollar is holding up pretty well. given the proxy it has two how well or how badly iron ore does. 6616 is what we are tracking a midst has been a bit more elevation on the bloomberg

index. and finally, watching the dynamic when it comes to crude supply as well as a pretty steady dynamic that the market is in a wait and see mode for the opec report and inflation data and on the back of the three day drop we had in oil. unchanged at the moment. looking at treasuries. the one data point in u.n. -- in u.s. inflation is key. the fresh data is what will drive bond markets from here in terms of one the first rate cut will come. we have seen the market reacts strongly to the mixed jobs report from friday. >> let's bring in our next guest , kelvin tay is the regional cio at ubs global wealth management. the numbers later today could be

something that underscores that the fed path toward cutting is still uncertain. kelvin: absolutely. if you look at the data coming out last weekend regarding the nonfarm payroll, the data seems to be mixed. unemployment, 3.9%. the jobs market still remains very robust generating more jobs than expected. if you look deeper into the details, some of the details are softer. wage growth at 0.1%. your december and january jobs creation numbers were revised downwards significantly. the pap is not smooth but we still think a june cut is in the books where the fed is concerned. >> on that point of the numbers coming in on the u.s. economy, we have had jamie dimon saying

u.s. recession is not off the table. is that something you would agree or disagree with? kelvin: i think we think the chances of a u.s. recession this year are slim. given other aspects of the u.s. economy remained robust and resilient. look at the gdp growth in the first quarter of this year. looking at close to 2.3% on a trend basis. the growth last quarter was pretty strong. we don't think a recession is in the cards. definitely not for the first half of the year. in the second half, we think that u.s. economy will slow down a fair bit. the federal reserve -- any slow down where the u.s. economy is concerned can be very visionary in the early stages which means the unemployment rate could surpass 4% on a short-term basis.

>> looking at japan, there is a strong correlation with how u.s. equities perform and how that passes through japan. we are seeing a pullback on account of the boj expectations. do you use these moments to add to positioning for japan? kelvin: no. where the japanese equities market is concerned, we are wary that if the japanese yen appreciates, the relationship is quite strong. any appreciation and the japanese yen would likely yield to a negative performance on the japanese stock market and therefore we are quite wary about. with the exception of perhaps the japanese yen -- if there was any pullback, there is an opportunity to accumulate. and the net -- would likely continue. on top of that, we do think that if the negotiations comes in

closer to the 4% range, the chances of the boj reversing its negative interest rate policy is pretty high. >> do you think you -- kelvin: all that is true, when you talk about the increase in the r.o.e.'s, the increase in capex expenditure, it is true but you cannot deny the fact that last year the main driver of japanese equities was because of a week yen. japan was the only major g10 country to end -- as a result of that, it led to an easing of monetary conditions. a stronger yen will certainly

impact the export margins of the exporters which means the majority of the nikkei will probably be negatively affected by that. >> when it comes to china, i feel like we have wrapped up this year's npc, fairly neutral. i don't know if we got that much more out of policymakers. do you still see opportunities despite the status quo of a structural slow down for china? kelvin: if you are targeting 5% growth for the year and your fiscal deficit remains at about 3.5%, you are unlikely to be able to achieve a 5% growth. that means china will probably have to step up fiscal stimulus. that is what we are watching closely. and there has been some discussion on allowing the property developers the chance

to -- the escrow funds. and that could help them with the cash flow. even then we don't think there is enough. to reverse the negative sentiment in the property market right now, you really need weekly sales where the properties are concerned to pick up substantially. so far the sales of the property developers are down -45%. >> that was kelvin tay, regional cio at ubs global wealth management. 10 minutes for a trading for japan. and korea. the ones we are watching are the steel shares. we have been tracking the movement in iron or. it dropped back below $110 a ton.

you're seeing the weakness coming through in some of those mining stocks. australian, japanese and korean. the broader weakness is around the story of demand from china and the inventory buildup we are seeing. we spoke last hour about how no matter what time horizon you look at, it is hard to be constructive on iron ore demand at this time. let's look at some other names we are watching. the pharma space -- astellas is getting drug exclusivity for one of its treatments. we are looking at sosei as well because it will be developing a schizophrenia treatment with a pharma peer here. it will be getting an upfront payment of 25 million euros.

for oracle linked stocks -- these are under pressure even though oracle itself has been rallying in trade. it reported a spike in bookings attributed to its cloud business. it is trying to beef up that part of its business to compete with amazon and others. it does play into the broader trend today. a little wait and see as they focus on the u.s. inflation print and what it means for the fed. >> coming up, chinese lawmakers have approved amendments to a law that tightens the ruling party's grip on the cabinet. we have those details next. this is bloomberg. ♪

get help reaching your goals with j.p. morgan wealth plan, a digital money coach in the chase mobile® app. use it to set and track your goals, big and small... and see how changes you make today... could help put them within reach. from your first big move to retiring poolside - and the other goals along the way. wealth plan can help get you there. ♪ j.p. morgan wealth management.

haidi: the chinese legislature has voted to change a four decade law. the changes would emphasize the leadership of the party and encourage the cabinet to follow certain ideologies. is this another instance of how -- we are starting to see the extent and reach of the party across all levels of government? >> i think this is the latest sign of that but it is a process that has been xi is a process that has been happening ever since xi took power in 2012.

that has been one of the core things that xi has tried to change about china since taking power and this is another sign of him making additional progress on that front. annabelle this is something that extends beyond him because you're also looking at the governance dynamics into the future. >> i think it is interesting the timing of this amendment change. this is the first year that the npc is happening under the leadership of the new premier. the new premier is xi's man, someone he has a long work history with. the men have known each other for a long time. as opposed to earlier, the state council, the npc being held under the auspices of the current previous premier who

came up through the system and was not part of xi's camp. i think it also signifies that xi's control is stronger than ever. haidi: you talk about corporate boardrooms to university lecture theaters, what are the implications for investors? does that mean there are concerns when it comes to his ideology and views on national security concerns and how that impacts the companies being run in china? >> i think the main concern at the moment is transparency. that has to do with the elevation of national security vis-à-vis economic development in terms of priorities. the concern is to protect national security, does that mean there is going to be less information, less insight provided for the economy, for

policymaking? and will that mean that investors in the business community are going to have to make decisions with less information available to them? it has made people more hesitant to put money into china. the political situation of the u.s. has not helped. that is the main concern with the canceling of the premier's press conference at the end of the npc this year and i think that continues to underline that concern in the business community. annabelle: that was our grade china senior executive editor. let's look at iron ore prices. yesterday we had the biggest drop since 2022. today it is stabilizing somewhat you are back below the $110 level per time. asian steel shares showing weakness in turn from that. look at the outlook. bringing in our senior editor

for china energy. we have been discussing short-term horizon, longer-term horizon and probably medium-term. it is difficult to build a constructive case around iron ore right now. jason: i think that is right. the market does not quite believe in china's growth plans. i think it is more about the fiscal measures to get to the 5% target. i think the market was hoping for more infrastructure spending at the npc on that did not come about. what you see now is iron or dropping, down 25% from its recent highs. if you extend the time frame, you would have to look at everything involving china's housing markets. you have a protracted crisis and the housing market, it is difficult to make a case for any

kind of gains in iron ore. haidi: there is also the supply issue. i wonder, do you think $100 could be in place soon? jason: this new mind will bring a lot more supply online. i think you also have a problem with china's steel market in that may be more scrap steel is being used as a replacement to iron ore so there are supply pressures. the thing in front of us at the moment our demand pressures that could bring the 100 play. -- $100 in to play. haidi: you can get a round about the stories you need to know to get your day going. bloomberg subscribers can go to dayb on your terminals. you can customize those settings so you just get the news on the

industries and assets that you care about. this is bloomberg. ♪

haidi: a survey of bank of japan watchers found that his slim majority still expect the end of negative rates to come in april even as march bets grow. let's bring in a senior editor joining us from tokyo. we have had some pretty strong economic data coming in and we have had a signaling from bank of japan officials. >> it is extremely live. the breakdown right now is almost 50-50. the number looking for april has come down to 54% and those

looking for a decision to move next week are now about dirty 8%. those numbers could increase. we are at the peak of the annual wage negotiations. those will culminate on friday with an announcement but we will get ribs and drives. every day we will have a hunch of unions giving us details. last night coda reported that softbank has agreed to give salary increases of 5.5% on average to its staff which is a new record. we are seeing a lot of anecdotal evidence pointing to strong wage increases this year. haidi: there is a lot more data that will be available before the april meeting. what are the expectations in terms of a move this month or next month? is their argument that if the market is prepared for it, maybe that is the window they want to

take provided the wage numbers come in as expected or better? >> that is right. it is true that in april there will be a lot more data to look at. there will be a meeting of regional managers around the country who can update the policy board on conditions in local economies. there will also be a boj survey that will come out before the april meeting. however, the window is wide open and if wage increases this year exceed those last year -- last year the highest in decades -- and it looks like they will be even bigger this year. if that is the case, i think the boj will have to say the window is wide open. sees the opportunity -- seize the opportunity. there is a good chance they will hike rates on tuesday. haidi: we spoke to kelvin tay

earlier who sounded quite cautious because of the strong correlation between how markets perform and the weakness of the yen. on the other hand, is there an expectation that the inflationary confidence gets a boost if the boj acknowledges this is a sea change in how domestic assets should be valued? >> that is a key question -- how a rate hike would affect sentiment for everybody. it is true for assets as well as consumption. in yesterday's gdp data, the revised statistics, personal consumption was revised downwards. household spending has fallen for 11 straight months. we are looking to see if sentiment for everyone including consumers pick up enough they feel they can confidently go out and spend money again? and that would put the cycle of wage hikes, price gains into

play and that would give the boj the confidence it needs to raise -- to hike once if not a second time. haidi: the latest on the bank of japan. the boj is one part of what we are watching but also u.s. inflation. that is how we are seeing global equity markets pacing themselves. european equity futures looking positive. the dax, .4% higher. investors in this part of the world are concerned about catching the next leg higher that hedges being put in place for a pullback. markets have been rallying ahead of what we have seen as a pullback early this week. watching currencies. we have seen a bit of an outperformance in the latest rally for the pound against the dollar and other g10 currencies.

and the move in u.s. -- and u.k. gilts as well. annabelle: markets might be pacing themselves but cryptocurrency is not. taking a look at how bitcoin prices are faring. trading above the 72,000 mark. we had not seen that before yesterday. we are up for six days. looking at gains of 70%. it is a big flow we are seeing into these and it is creating a lot of demand for the tokens. those demands cannot be met. and you can add the anticipation of the bitcoin

haidi: some data crossing the bloomberg when it comes to business confidence numbers for february in australia. we have seen going into the end of last year, business confidence plunging to an 11 year low with consumer sentiment also in pessimistic territory. we see the number for february, business confidence coming in at zero. business conditions coming in at 10. this continued to play into some of the concerns over a sentiment both for the corporate sector and households as a result of 13 rate hikes by the rba. this morning we heard from sarah hunter from the rba the deputy governor acknowledging her the assistant governor acknowledging the households in australia and businesses are clearly struggling at the moment. annabelle: what else has been struggling is the china equity

market. rising geopolitical troubles. the latest issue we are discussing on that point. let's discuss that with our reporter joining us from singapore. we always have geopolitics as one of the things we talk about. sometimes the economy or other issues but it seems that geopolitics is coming back to the four. how will that play into the ark it in the near term -- market in the near term? >> we are back talking about geopolitical tensions. i felt they had died down towards the end of last year. since the start of the year we are seeing health care, technology, the chip space in particular and on the tv front where the u.s. is -- on the

ev front where the u.s. is moving to curb china's dominance on the global stage. in the health care space you will have firms facing restrictions on accessing federal contracts. in the ev space, the u.s. is talking about important thing certain restrictions that go beyond tariffs. and just this week we broke news that a company is facing potential sanctions in the u.s. and is being added to the entity list. this is all coming ahead of the u.s. elections in november. we will see this rhetoric climb as the elections draw closer. the msci china index has slowed down and eased up on some of the

gains though it is up 11% since january. you can see how the npc along with the geopolitical tensions are weighing on the market right now. haidi: as you alluded to, more volatility ahead with the u.s. presidential election. do we got the sense that the short-lived stability could make way for more uncertainty? >> absolutely. everyone zeros in on china when it comes to the u.s.-china relationship but under biden, this is a bipartisan stand that the u.s. has taken against china. in the past, under trump, for other reasons of course but the chinese equity market rose 100%, doubling. under biden because of china's

own domestic issues including the property crisis, it has done badly. some market watchers are saying that may be donald trump can limit the issue to a u.s.-china relations while biden is trying to rally other countries and make it a more global action against china. so things might be better under donald trump potentially for the chinese stock market. it remains to be seen. one thing we know for sure is that uncertainty will rise as the u.s. election draws closer. haidi: our asia stocks reporter with the latest. let's bring in elizabeth economy, senior fellow at hoover institution. to our reporter's point, what do you make of the risks in this relationship if there is a second presidency for donald trump? do we get a different set of

dynamics given that beijing is less preoccupied with band width the domestic challenges? elizabeth: part of what we have seen in the biden administration has been a continuation of the trump administration's policies like tariffs. the issues the u.s. has with china around de-risking both for national security grounds and also economic security related to supply chains, these are not going to change from the biden administration to a second trump administration. it is also important to understand there is concern within the u.s. business community about what has been taking place inside china in terms of the regulations around national security and constraints around the free flow of information they need to make good business decisions. many factors are playing into what is going on inside the

united states so to some extent the election will be one important factor but i think underlying -- the underlying factor in u.s. politics today what the congress, the u.s. business community, are easily as important as any kind of transition you might see from biden to a second trump term. haidi: perhaps the tender has been more stable but the policies have been -- the tenor has been more stable but the policies have become less so. there are trade barriers going up everywhere related to ev's and semiconductors. does that make it harder for china to maintain its own domestic growth priorities? around 5%. we don't know how they will get there and got no detail from the npc. elizabeth: a lot of things wrapped up in that smart

assessment you made. on the one hand, china is putting forth a fairly confident projection of 5% growth. i think there is a lot of doubt in the u.s. that it achieved the 5.2% that it said it achieved this last year. jan that, -- beyond that, for the u.s. it is important to understand there is a -- there are distinct initiatives. one, when you're talking about chips, these are related to the highest and chips, related to national security and selling china chips that could be used for military applications that would undermine u.s. national security. and then there is de-risking around supply chains. covid was a wake-up call. we don't want to be dependent on any country, like taiwan for example for chips. we want to have resilient supply

chains and need redundancy. it is a second de-risking effort. and the third is around competitiveness. china has a number of policies around subsidies, nontariff barriers that the u.s. wants to address. there are sets of policies that are being put forward by the united states and it is important to understand the buckets in which those policies fall. they are different. my last point is that this is not just a u.s.-china story. look at what is happening with japan and the eu and china. policies and trajectories of engagement in terms of the trade relationship and investment relationship. this is not all about the united states and china. this is about advanced economies and their concerns when it comes to china. annabelle: to that point, do we

need to look beyond that bilateral relationship? and seek to have a greater understanding of the u.s. elation ship with some of those key allies? elizabeth: as i have watched u.s. policy and then watched european policy, and the japanese policy, there are moments in time when japan has led. on the supply chain, japan was ahead of the u.s. certainly on chips and chip manufacturing equipment, the u.s. has led. on ev's it was macron who first came back after his first trip to china and said, we are going to be swamped by chinese ev's. what will we do about it? the overall policy towards china and the tougher line did initiate with the united states. if you look at the chinese

policies that have come out of germany, for example, their strategy looks just like the u.s. policy. that is not because the u.s. is telling germany what to do because over time, germany has come to many of the conclusions that the u.s. did. annabelle: china needs to export its overcapacity in certain areas. if you do have that pushback from the u.s. and its allies, how does that play into the growth story? elizabeth: it is challenging for china. it is because they are not taking a proper set of domestic policies. if you look at what came out of the npc, it was all about investment in advanced manufacturing and industry. where were the policies designed to address consumption in china? basically nonexistent. i -- they do not have enough demand domestically.

they will continue to try to export their overcapacity. that was the origin of the belts and, exporting overcapacity in cement industries and construction industries but it mostly went to emerging economies. they will need to figure out their own domestic economy. i think they will find increasing barriers to many of their products, not just from the united states but from europe and other advanced economies. haidi: what is the biggest risk -- you talk about relevance and consequence if the u.s. and china continue on the path of de-risking on each side. what does that mean for the ultimate threat of chinese hegemony or china's concerns over u.s. hegemony? elizabeth: i like to think of it as not playing into hegemonic aspirations but instead that we are really trying to find a new

equilibrium around de-risking. honestly, it is not easy. china has always had a much more expansive concept of the relationship between national security and the economy. it began with indigenous innovation in the early 2000's. we had dual circulation in 2020. all of these were basically designed to protect the chinese economy from the pressures of the global economy. while, in fact, trying to ensure that the global economy remained a pendant on the chinese economy. now the u.s. is trying to de-risk itself. i think there is a little bit of catch up going on but ultimately we need to find a new balance. i think that was part of the message that came out of the summit between presidents xi and

biden last november. we are looking at guardrails. we don't want the relationship to devolve. we want to find channels of communication and work out the issues. the good news is there is a bilateral economic dialogue between the countries. the dialogue will be at the vice minister levels and happening next month in washington. hopefully, there will be an opportunity to work through some of these big strategic issues at the same time as deal with some specific company issues on the ground. annabelle: that was elizabeth economy, the senior fellow at hoover institution looking at japanese assets and how they are fearing so far in the session given the lines dropping right now from japan's finance minister. he has been speaking in tokyo.

we are seeing more strength continuing to the japanese yen. below the 147 mark. equities have not had a big dent. by the yen strength. tsuzuki has been speaking in tokyo saying inflation, he cannot say it has completely ended. price trends need to be checked comprehensively and he also cannot tell what is missing in overcoming inflation but he expects the boj to continue to conduct appropriate monetary policy. and a big count to the boj meeting that will wrap up next tuesday. we will have more ahead. this is bloomberg. ♪

when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns. avalarahhh ahhh starting a business is never easy, but starting it eight months pregnant... that's a different story. i couldn't slow down. we were starting a business from the ground up. people were showing up left and right. and so did our business needs the chase ink card made it easy. when you go for something big like this, your kids see that. and they believe they can do the same. earn unlimited 1.5% cash back on every purchase with the chase ink business unlimited card. make more of what's yours.

annabelle: the founder of chinese boutiques pavillion says the country seemed remains resilient. they spoke exclusively to bloomberg after the country saw sales during the lunar new year period despite slowing consumption concerns. >> since 1895 when the brothers first invented cinemas.

it was the first time those cinemas have been closed. it was devastating to the industry. i am very glad that the industry is still very resilient. >> the average age of a theater goer is lower here than in the west. 20 is the average age? >> that is correct. >> are younger people coming back? there is a lot of youth unemployment in china and there is a lack of discretionary money at this time with the economy so slow. what are the trends that will make this a sustainable recovery? >> i think the cinema is still very affordable. and it is also a social experience. during the pandemic, people realized how close you can be. at that moment, it does not matter how many materials you

have poorhouses or cars. but rather your experiences. we know there are people willing to spend more in immersive experiences, social experiences. >> ticket prices -- you said they are relatively affordable. have you had to adjust the prices? >> i think there is some adjustment in our price not only because of inflation but i would rather say there are many different types of movies. in china we have different prices for different movies. for imax or special effects movies, we can usually charge more. but since the pandemic since the production cycle has been changed, we don't see that type of products coming out. >> last year there were no hollywood films in the top 10. is that an ongoing trend? >> i think it is an ongoing

trend and also it is not only for china but worldwide. the sci-fi action movies, the big budget movies did well 10 years ago because there was not much supply then and people loved to come to the theaters to watch those. now the technology is getting more popular. in china you have the creation of gods which is also a big-budget action movie. even in india and thailand they can produce movies. but instead, hollywood needs to have a bit more creativity. instead of doing sequels for these superhero movies, i think this is some consumption behavior trends that they have

to spend more time on. last year oppenheimer and barbie did pretty well in china. it is not like the chinese audience does not like hollywood movies. we just like that her stories. it does not matter who created them. haidi: that is the founder of the movie company with stephen engle. the argentinian central bank. it appears to be an off cycle move lowering the bench rate effective march 12. this as we expect inflation numbers to come through. they are expected to slow monthly but on an annual basis to top 280%. the president's fiscal efforts should be bringing relative monthly inflation relief.

we see the argentina central bank lowering its benchmark rate to 80%. out of cycle. bloomberg was expecting a hold as well as the next meeting. more ahead on "daybreak: asia." this is bloomberg. ♪

annabelle: you are watching "daybreak: asia." looking at some of the bitcoin blinged stocks. the moves appear to be to the upside. watching bitcoin prices. we are above 2000 for the first time ever. let's bring in our asian finance reporter. i think that is the big question. we have had such a big run-up in prices. there is an event ahead. what are we expecting -- some sort of correction or further gains? >> you are right on the triggers that have led to the higher numbers. it is a relentless rally. if we take a closer look we can understand that leverage is high. the so-called big investors of

bitcoin have not yet come in completely fully to the rally. they are sitting on the sidelines of the rally. that means there could be some kind of correction or cap in the gains we are seeing on bitcoin. of course, the momentum is strong and also microstrategy has been impacting bitcoin. these demand led factors are pushing up prices but the big wheels are likely to profit big and once again the leveraged positions become too costly. people will have to make some kind of profit. there could be some moderation in the soaring of the bitcoin prices but there is still the question about supply going

ahead. haidi: we will leave it there. our asian finance reporter talking about this incredible surge we are seeing across bitcoin. but more muted across other asset classes ahead of the key inflation numbers. it is keeping a lot of confidence on the sidelines. s&p futures up by .25%. taiwan futures looking flat at this stage. watching ftse china. the disappointment from the npc and concerns over the iron ore sector as a correlation what we are seeing with property in china as well as some of the broad-based geopolitical overlay potentially bringing more headwinds to chinese equities. this is bloomberg. ♪

yvonne: you are watching the china show, i'm yvonne man. pressure mounts on state